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Letting go of liability: COVID-19 waivers & force majeure clauses




FORCE MAJEURE CLAUSES REDUCING PAY


The goal of a contract drafter is to put all assumptions in writing. But what can a drafter do when there are circumstances that neither party can anticipate? Good lawyering involves anticipating these considerations. Force majeure clauses are used to allow either party to terminate the contract upon the occurrence of an event beyond the parties' control.

Typically, the contract may say something along the lines of, “Either party may terminate for any delays caused by any circumstances beyond its control making the performance impracticable.” Generally, the parties contemplate the event in writing by listing them, but some do not.

Over the course of this pandemic, this clause has become more and more important. This clause is very common in the major sports leagues regarding player salaries, sponsorship agreements, and other deals. For instance, Article XXXIX of the NBA’s Collective Bargaining Agreement contemplates that, “Sabotage, terrorism or threats of sabotage or terrorism; explosions; epidemics; weather or natural disasters, including, but not limited to, fires, floods, droughts, hurricanes, tornados, storms or earthquakes; and any governmental order or action (civil or military)” may result in reduced compensation for players. The NBA has decided to invoke this clause due to the lost games, and as play resumes in Orlando, the salaries will be reduced.

The NFL’s CBA does not contemplate force majeure. However, Article 12 of the NFL CBA provides that if there are any cancelled games due to a natural disaster or similar event, “The parties shall engage in good faith negotiations to adjust the provisions of this Agreement with respect to the projection of AR and the Salary Cap for the following League Year.”[1] For the NFLPA, this means that salaries could be reduced for next season to account for lost revenue in the upcoming year.

College athletics has also been affected by this clause. Last week, Under Armour decided to cut short its 15-year, $280 million sponsorship agreement with UCLA due to unsatisfactory performance of obligations, mainly concerning the delivery of marketing benefits. Out of all the schools Under Armour has partnered with, UCLA is the lone school to have a force majeure clause in their contract.[2]

This means that if Under Armour would like to escape any other deals with schools, they will have to look elsewhere in the agreement.

COVID-19 LIABILITY WAIVERS BECOMING MORE PREVALENT

As the major sports leagues resume play this year, there is much concern over what to do if players, coaches, or staff test positive for COVID-19 during the season. Will the leagues be held liable?

Organizers have attempted to allocate risks from negligence claims to participants through COVID-19 liability waivers. COVID-19 liability waivers have become common in organized sports across the country, including youth sports. High schools throughout the country have begun to create waivers requiring parents to sign before their children can participate in sports. These waivers will read as follows: “In consideration of being allowed to participate in the activity the undersigned acknowledges, appreciates, and agrees that: (1) participation includes possible exposure to and illness from infectious diseases, including but not limited to MRSA, influenza, and COVID-19.”[3]

These waivers are very concerning and not unique to the sports world. Lawmakers across the nation have started to consider more protections from liability without the waivers, as some have issued executive orders shielding liability from businesses. Many businesses are currently lobbying in Congress for exemption from liability. Additionally, salons, gyms, and other entities have created their own liability waivers in the meantime.[4]

These waivers will likely be used for event attendees in the future because they allocate the risks to the participants. NCAA student-athletes were required to sign these waivers as they returned to voluntary workouts.[5]

This is very unfortunate to say the least. If these waivers continue without challenge from lawmakers, it will deter social distancing by giving employers, businesses, event hosts, and sports organizers the incentive to ease restrictions because there are no consequences for their negligence.

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Andrew is a rising second-year law student at Elon University School of Law.

[1] Mike Florio, NFLPA acknowledge lack of force majeure clause in CBA, NBC Sports (Aprill 22, 2020), https://profootballtalk.nbcsports.com/2020/04/22/nflpa-acknowledges-lack-of-force-majeure-clause-in-cba/.

[2] Eben Novy-Williams and Michael McCann, Under Armour’s UCLA Dispute May Depend on Force Majeure, Sportico (June 30, 2020), https://profootballtalk.nbcsports.com/2020/04/22/nflpa-acknowledges-lack-of-force-majeure-clause-in-cba/.

[3] Jeff Eisenberg, Signs of the times: Some athletes required to sign COVID-19 waivers before playing, Yahoo! Sports (June 18, 2020), https://sports.yahoo.com/sign-of-the-times-covid-19-waivers-before-playing-181822890.html.

[4] Ana Swanson and Alan Rappeport, Businesses want Virus Legal Protection, workers are worried, The New York Times (June 12, 2020), https://www.nytimes.com/2020/06/12/business/economy/coronavirus-liability-shield.html.

[5] Michael McCann, Six Reasons To Question The Enforceability of COVID-19 waivers in sports, Sportico (July 3, 2020), https://www.nytimes.com/2020/06/12/business/economy/coronavirus-liability-shield.html.

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